How to Improve Your Credit Score Starting Now

Your credit score is the first impression of you when it comes to lenders, and it can tell a lot about you, if you are a responsible borrower, or if you do not take your finances seriously.  Whether you already have great credit or you are in need of improvement, you should always strive for the best to take advantage of the best rates on the market.

Take a Look at Your Credit Report

The fastest way to improve your score may just be because of misinformation on your report that needs to be cleared up.  You should at least look at your credit report once a year to make sure that all personal information and accounts are up to date.  Keep in mind that reports are usually at least a month behind, so if you just made a large payment or closed an account recently it may not have caught up yet, so not to worry.

Pay Down Any Debt

If you have a spending issue now, the first plan of attack is to stop using a credit card to avoid continuing to rack up the account balance that you are currently not able to pay off, so why keep increasing it.  Cut up the card if you have to, whatever keeps you from spending, and really focus on paying down debt.  If you are carrying a balance over each month, you will be charged interest, so you will need to make large payments in order to see a reduction of the principal balance, instead of the payment all going towards interest charges.

Keep Accounts Open

A common misconception is that once you pay off an account, the first instinct would be to cut up the card and close the account.  While cutting up the card is not a bad idea so you can avoid using the credit card if you previously had a spending problem, but closing the account could actually hurt your score.  A portion of your credit score is based upon the overall debt to available credit, so if the account is closed, you could drastically be reducing your available credit and make your debt situation look a lot worse than it actually is.

Set Up Automatic Payments

The biggest advice to give, is pay on time.  Late payments that are thirty days past the due date can stay on your credit report for up to seven years, so to show lenders that you are a responsible borrower, make sure it is paid on time.  Not only to keep your credit report in check, but paying even a day late can incur late fees or hike up APR, which will make interest charges skyrocket.

Stop Applications

Although it is a small portion, credit inquiries do make up part of your credit score, so every time you apply for a new credit card, personal loan, or mortgage, when they pull your credit, it affects your score.  Try and make sure that if you are having your credit pulled, you are looking to proceed if it improves your situation such as a mortgage refinance to a lower rate, or a credit card with say 0% APR.

How to Financially Plan for the Birth of a Child

The birth of a child is said to be a miracle, but it is a miracle that we can even afford children in this day and age.  If it is your first child, you are in for a rude awakening.  According to a recent study by the U.S. Department of Agriculture, the cost of raising a child born in 2015 until the age of seventeen is $233,000, or $13,000 a year, and that does not include the cost during pregnancy or the whopping costs of college.  Before your little one is born, try and plan for what will likely to be a huge hit to the wallet.

Budget

Having a household budget is important no matter the size of the family.  It may be a little easier to budget if you are solo or even married, but throw in children to the mix and you will begin to adjust on the fly.  Babies bring extra expenses that come with medical bills, but as the child gets old you will need to factor in food and activities to monthly costs.  It is no wonder that two-thirds of American’s fail at a successful budget.

Start Saving for Day Care

As soon as you find out you are having a baby, it would be a good time make sure not only that emergency fund is built up, but that you begin to save for day care.  With most day care centers charging upwards of $60 per day to care for your child, for working parents that will add up to huge costs over the course of a month.  Figure around twenty working days, you can plan on spending the cost of an extra mortgage payment a month.  Maybe you have a relative or friend that is retirement age that wouldn’t mind being paid a discounted rate.

Try and Make Other Sacrifices

Like any successful budget to work, you will need to reduce unnecessary expenses so that at the end of the month, there is more money coming in than going out.  Well throw in having a child, and you will need to continue to cut spending even further, most likely reducing some of your priorities.  If concerts are your thing, maybe you go to a few shows a year instead of all of your favorites.  Eating out is probably the biggest money saver, so if you really try and stay strict on going grocery shopping and only going out to eat once in a while, you will see the savings add up.

Life Insurance Premiums

If you are looking to leave your spouse and baby with a comfortable means to live on for a while due to your unfortunate passing, then setting up a life insurance policy right away is a must.  Premiums will begin to go out the older you are, so if you are young, healthy, and free of tobacco, then you could probably get a good thirty-year policy for around $40 a month, which is not bad knowing that at least your family is taken care of if something were to happen.

How to Keep Personal Finance Successfully Organized

Usually the end of the year can be a reflection period when it comes to our personal finances.  We take a look at what we have in the bank account, how much debt we have, and wish we could have done things different.  There can always be improvement and it is never too late to start.

Set Up Payment Dates

With so many payment due dates between the mortgage, loan, utilities, phones, and credit cards, it can be overwhelming to keep track of the payment due dates and when to make payments to ensure you have sufficient funds, with enough money left over for everyday expenses such as food and gas.  If you are paid bi-weekly, for example, try to evenly distribute expense payments between the paycheck dates, setting up automatic payments for the best payment dates.  As long as you do not pay late (mortgage and car lease usually have grace periods), paying on or before the due date that spreads out available funds may work better instead of say paying all in the beginning and not having much left for the remainder of the month.

Direct Deposit to Savings Account

If you set aside money for yourself automatically, there will be less temptation to spend it on unnecessary items and prepare yourself for financial success in the future.  Setting up a payroll direct deposit to a savings account will be a great way to contribute every paycheck, building up that much needed emergency fund in case a large unexpected expense were to occur.

Monitor Every Dollar Spent

As you are working on getting your finances in order, one thing that needs to be a way of the past is careless spending.  It is time to get out the bank and credit card statements and monitor every dollar that goes out.  Take a look over the course of a month what the spending was, see if you can separate what was a monthly bill, and what was spending money.

Follow a Household Budget

Now that spending is under a microscope it should open up your eyes just how much money is going out the window every month and it is time to lock up the wallet.  Start allocating funds to needed monthly expenses such as utility bills, mortgage, car lease, and necessary spending on grocery shopping and gas, while still contributing to a savings account.  This should hopefully keep a tighter budget within the household and limit spending to necessary items.  Be sure to still budget for fun, as that does not have to end entirely, just have to be smarter about spending without sacrificing your future.

Keep Track of Documents

As you are about to find out as tax season approaches in April, if you haven’t already started piecing together to prep your upcoming return to see if you are getting a refund, it takes time to gather up all of the documents.  Compiling in a folder on your computer, or even printing out and storing in a file cabinet, keeping important documents such as W-2’s, student loan interest forms, mortgage loan interest statement, charity deductions, etc. in an easily accessible place will help when it is time to file.

How to Get Finances in Order to Start 2017

The end of the year is usually a period a reflection, not just where you are with your life, job, dating, but also where you stand financially.  If you have made poor choices when it comes to spending or a lack of saving, then it is never too late to turn things around.  Putting off any financial responsibilities to the future will never leave you in a good position in retirement.  Even if you are in your mid-thirties it may seem like you have all the time in the world, but think about how quickly it has gone by since you have been out of college.  Take a look at your finances and have a great start to 2017.

Use a Budget

Creating a budget to track all of the money going out and coming in is not entirely difficult, but actually sticking to it is another story.  It can be easy to quickly dismiss if a budget is failing, but it actually will take a few months to tweak it to work.  If you are unwilling to remove any unnecessary spending, or have the wrong amount of funds allocated to each area, you may be doomed from the start.

Don’t Forget About You

A recent study by GOBankingRates found that one-third of Americans have absolutely nothing saved for retirement, with a separate study showing the same amount of us have nothing saved in savings account either.  What that means is that if there are no adjustments made now, you will enter your golden years with a penny to your name.  Start taking advantage of company matched 401(k), or invest in either a traditional IRA or Roth IRA to invest in your future.

Take a Look at Your Credit Score

With so many credit card companies offering your credit score free on monthly statements, there should be no reason you could be in the dark when it comes to your credit.  Once a year the major credit bureaus offer a complete copy of your credit report (without a score) free, so you can review for any inaccuracies, especially if you plan on having your credit pulled for a refinance/purchase loan, where higher interest rates could cost you thousands over the course of the terms.

Put Year-End Bonus to Good Use

Getting a holiday bonus is great and the first instinct may be to blow it on something you have always wanted, but before you go running to the store, make sure it is going to good use.  Any extra money should be first going towards paying off debt and setting up an emergency fund.  Only after that should the money be spent elsewhere.

Gather Up Charitable Donations

It can always be scary to wonder how much you will owe when it comes to filing your tax return, so why not have a little extra coming back being able to write off charitable donations.  Cleaning out your closet, garage, or basement could be great places to donate clothes and other household items to those in need.

Smart Ways to Save Money in December

The holiday shopping season drains the bank accounts enough, so we should be looking to save every dollar possible.  Sometimes removing unnecessary spending is not enough and we need a little adjusting in other areas to maximize savings.  This December would be a great time to make a few tweaks to set up 2017 for financial success.

Set Up Direct Deposit for Savings Accounts

Having the available funds in your checking account will often prevent any from moving over to savings accounts because it is there for spending.  Instead, set an automatic deposit from your paycheck that will automatically going into savings so you avoid any temptation to either not move over as much as you should, or spend it all.  By starting with a little a fist, you will not even miss it, and then can gradually increase each paycheck so that you will see a continuous rise in the savings account balance.

Spend with Cash Instead of Credit

Not that using cash instead of credit will stop spending altogether, but it may give second thought to any unnecessary spending if you are only using your own set allowance.  Seeing the cash leave your hand and go into the cash register should at least make you think about if each purchase is worth it.  Credit cards can often feel like play money, not having to worry about paying until the next month’s account statement arrives.

Start Setting Donations Aside

With 2016 coming to a close it is time to start thinking about the upcoming tax season and now would be a great time to get your donations in order to write off when you begin to file.  A good place to start would be cleaning out the closet, putting clothes in piles of not only washing, but what can be donated versus time to throw away.  Next scouting out each room for any larger items such as furniture, TV’s, or the CD’s, DVD’s, and books that are probably now collecting dust in the digital age.

Keep Cold Air Out

The winter weather is upon us and before months go by wasting away extra money on our gas bill, it is a good time to check out doors, windows, and outlets that share an outside wall for drafts.  Running a new line of caulk or foam insulation will immediately keep the warm air inside.  Any way we can help from the heat kicking on as often will only save you money not only in December, but the entire cold season.

Take Advantage of Credit Card Rewards

With the holiday season in full force, since we are spending a ton of money anyways, we might as well get a little back in return.  Check your credit card rewards program to see that are you taking full advantage, getting points for purchases that you can redeem in gift cards, or a lump sum cashback check.  Just keep an eye on that spending balance to make sure it still fits your budget now that you are putting on credit instead of using cash/debit.

Five Ways You Could be Hurting Your Credit Score

Having a great credit score is the best way to take advantage of the lowest rates and purchasing benefits that are out there so if your credit score is not in good shape it could be costing you hundreds of dollars each month in interest.  We know that late payments are a huge factor, but take a look at a few other ways your credit score could be negatively affected.

Balance is Too High

A large factor of your credit score is the debt balance compared to the available credit, so the smaller that window is, the more your score is hurting.  If you continuously carry a high balance on your account, then credit limits may no longer be increasing so you are stuck at limits.  Begin paying down balances and not using the card for additional purchases to increase the gap in available credit.

Not Regularly Using Accounts

For accounts that you have paid and keep a zero balance and have left it open could be hurting your score.  Regular use such as charging, then paying off the entire balance by the statement due date will increase your score to show that you are a responsible borrower by not carrying over a balance to the next month.

Opening New Accounts

Each time you have a lender check your credit the scores will decrease, so limit opening new accounts, especially if you do not need it, as the inquiry will stay on your report for the next couple years.  Find a great mortgage rate that you can stick with, and a credit card with low interest and rewards, and you are golden.

Not Checking Credit Report

Checking your own credit report does not lower your score at all, so take on top of your report.  Not checking your report is setting up for fraudulent activity to be present on your account without you even knowing.  Not only could accounts be used, but depending on the severity, new accounts could be opened in your name.

Taking on a Debt Settlement

If your financial situation has hit and all time low and you have decided to take on a debt settlement, then you can expect your score to take a hit.  It shows the lender you can no longer handle the account, so the account may be frozen or closed, so depending on how many accounts, you could be starting from scratch when the settlement is over.

4 Perks of Having a Better Credit Score

Having great credit takes years to work up to with a solid payment history while carrying minimal debt, so why not get rewarded for your hard work.  Credit is the major factor in a loan decision, not only could it make or break the deal, but if your credit is less than excellent, then you could be paying astronomical amounts of interest, and for large purchases like a mortgage, that could be hundreds of dollars extra a month in just interest!  Not only do you need to improve your credit score for your own expenses, you also get to take part in the perks for having a better credit score.

Interest Rates

This is the most important, because as mentioned, you could be paying hundreds of dollars a month extra on only interest each month compared to those with great credit.  If you have a $150,000 mortgage and are paying even 1% interest higher than those that were approved at over 3%, over a 30-year mortgage you could be paying $35,000 additional during the life of the loan.

Higher Credit Limits

Those with great credit will not have a low cap on what they are able to spend each month, as the credit company will want purchases to continue to be made.  If you continue to pay off your balance each month and make payments on time, you will see your credit limit continue to rise.

Better Car Insurance Rates

Some may be surprised that your credit score has a factor into whether or not you are insurable, but although it does not have to do with your accident record, it does paint a picture to the lender to decide if you are a responsible borrower, and if you have defaulted on anything in the past, chances are you will not have an issue paying your insurance premium or be a reckless driver.

Rewards Cards

Lenders will approve you to have rewards cards which provide cash back, points, or airline miles, for example, to those that use the card for purchases.  The new Costco Citi card will have up to 4% cash back, which is huge, so why not receive a check every year just for using the card each month.  Credit limits are higher as well to allow for most or your monthly expenses to be put on the card, so as long as you are disciplined enough to pay off the balance each month, this is a great perk.

Smart Ways to Spend Your Tax Refund

As the tax filing deadline approaches and returns are almost finished being processed, for those that are getting a refund this year you may start to already be adding items to your online shopping cart in anticipating for when you see funds show up in your account.  Before you go and see the money disappear in the matter of a few clicks and grow tired of the most likely unnecessary items that you purchase, there are plenty you could have done with the money instead.  Sure going on a vacation could be a great escape after the winter weather, feeling the need for long overdue sun, but do not go to the travel sites just yet and get your hopes up.  A long weekend away could be filled with a few lasting memories, but remember your refund is not a gift from the IRS, it is an overpayment taxes that you paid throughout the year, so there are plenty of ways to put your money to good use.

Pay Down Debt

If you are paying balances on high interest credit cards each month then it is a no brainer to put your refund towards paying down debt.  Making low to minimum payments does nothing to get your out of debt, especially with some cards charging upwards of 16% interest, it would take many years to pay off depending on the balance.  It sure is not a fun way to spend your refund, but it is the most responsible.

Use for Home Improvements

Upgrading your home will not only give you satisfaction in your own home, but it also adds value at the same time.  In the interior consider replacing outdated appliances, worn out carpet, or even a fresh coat of paint can give life to a room.  On the outside, planting flowers, adding new mulch, or re-staining your deck will increase curb appeal and outdoor enjoyment for the upcoming summer.

Build Funds for an Emergency

Saving money for a rainy day does not mean going on a shopping spree, but having the funds available to you in case of emergency.  Experts have always claimed to need 3-6 months of expenses in an account in case of broken appliances, unexpected car repair, or worst scenario, a job loss.  This account may not be one were you have to add often, but being prepared is better than being unprepared and having to put it on a charge card.

 

Achieving Financial and Personal Well-Being

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Have you ever wondered why companies invest so much money into background checks on potential new hires? Does it seem weird that most want to pull your credit report as a means for determining gainful employment? Well, if you consider that on average, there is a $2,000 per employee cost that a business incurs annually as a result of their employees’ financial stress, then it shouldn’t be a surprise that employers know it’s important to do their due diligence in ensuring financially stable workers.

For background, there are many ways that an employee’s poor financial situation can result in losses to a company. Businesses could be prone to financial improprieties like theft. Or perhaps employees spend so much time worrying about their own financial situation that they are unable to focus on their work—taking away from their productivity and engagement which is never good for an employer. You might even be applying for a financial management type position, in which case, poor management of your own finances could reflect poorly on you. In any regard, it’s good to know you are not alone. Nearly 85% of the American working population report that they feel some sort of financial strain and stress. That said, strength in numbers doesn’t mean we should sit around and not try to tackle the issues of financial stress head on. It’s becoming increasingly important that employers understand the cash constraints of working Americans and that we, as the employees, look to work for businesses that offer some level of financial wellness programs. While it may sound cliché, it’s these types of programs that can help people get on track with their finances and not in a spiral of debt.

Truth be told, debt is burdensome and acts much like quicksand. The harder you fight to get out of it the quicker you dig yourself deeper into it. According to a recent debt study performed by NerdWallet, the average US household has over $130,000 in debt. Over $15,000 of that is in credit card debt alone. We have heard the struggles of the millennial generation as they struggle to find jobs and the ability to move into their own places. It’s no wonder that 40% of these millennial have used various forms of financing like pawn shops, payday loans, and advance loans on tax returns to fund their lifestyles over the past five years.

Fortunately, there is a company stepping in and partnering with employers to aid their employees toward fiscal responsibility and well-being. That company is Zebit. Zebit is a free financial wellness benefit that employers can sponsor—at no cost—and offer to their employees. The benefit is two-fold. First, it offers financial wellness education so you can learn everything from basic financial literacy to how to create a rainy day and retirement savings plan. The library is packed with tools and resources to give employees financial assistance. There is also an app called the Zebit Instant Budget App, which you can download and use on the go. By using the app, in a matter of minutes, you can receive a recommended budget to see how your expenses compare to others in your area.

The second part of the Zebit program gives employees access to an interest-free and worry-free credit option, called a “ZebitLine.” This is basically a line of credit that can be used to purchase items from a Zebit marketplace containing thousands of products and services at competitive prices. I’m not advocating that you utilize such a service to go on a spending spree, but it provides employees a better payment option when they make an unexpected purchase. With Zebit, employees can pay with their ZebitLine and pay it off over time, while never paying any interest or fees. Perhaps you need a new washer or dryer because your old one finally broke down and you can’t afford one. Maybe you just want to buy a new TV, but want to do so in a responsible way without accruing interest on a credit card. It’s great because you can shop in the Zebit Market, pay with your ZebitLine, and obtain the item while paying for it over time via credit or debit deductions until the product is paid off. You might call it a zen moment knowing all you ever paid for was the price of the product without any ridiculous interest or fees attached to it. Some people might otherwise be forced to take out a payday loan or put it on their credit card and carry a balance, or even worse, open a store card and carry a balance. Store cards have some of the highest interest rates out there.

I encourage employers to take a look at this free benefit for their employees, and for employees to bring this benefit to their attention. Check out all that Zebit has to offer, and make sure to download their free Instant Budget mobile app I mentioned earlier—available for download at the Apple App and Google Play stores—which takes the guesswork out of budgeting by automatically creating a customized budget based on income, where someone lives, and the number of people in his or her household.

Start Tax Preparation Early

Sure, tax season is still months away but, for those consumers who start handling some tax tasks now, the payoff can be quite large. In fact, with so much time between now and next April 15, you’ve got plenty of time to take the steps you need to make and cut your tax bill significantly. Below are a number of tax issues that you definitely should handle now in order to do that. Enjoy.

Tax Task 1: Pay your quarterly tax payments. If you’re self-employed or receive a sizable amount of income that isn’t subject to withholding taxes, now is the time to make up for any payments you haven’t made so that you don’t get slapped with a penalty later. The fact is, the sooner you pay that money, the smaller your penalty will be.

Tax Task 2: Make a decision about who will claim the children or any other dependents. If your divorced but share custody with a partner or ex-spouse, or responsibility for a relative, only one of you will be able to deduct that person or persons as a dependent on your taxes. The Earned Income Tax Credit for children is this way too so, while you have the time, figure out the math that makes sense for both of you.

Tax Task 3: Apply for an exemption if you haven’t gotten insurance yet. Unless you meet certain exemptions, you’ll be facing a tax penalty this year if you still haven’t purchased health insurance. Talk to your tax specialist about that and get your exemption number from the Health Insurance Marketplace.

Tax Task 4: If you have a flexible spending account, use that extra money. With most companies you’ll be able to carry up to $500 into next year, 2016, but it would be a shame to leave any additional money behind. Understanding the rules of the plan your company has is vital, as well as evaluating your expenses and looking ahead to what they might be in 2015

Tax Task 5: Decide whether you need to accelerate or reduce your income. For example, for some consumers it might make sense to prepay their mortgage and their real estate taxes in 2015, but for others paying them next year might be more advantageous. You’ll need to calculate where you are this year financially, as well as where you expect to be next year, in order to do that.

Tax Task 6: Make sure to offset capital gains and losses. If you were fortunate to sell stocks at a profit this year, make sure to sell some other stocks at a loss to reduce the amount of taxes that you’ll owe in 2016.

Tax Task 7: Give your accountant a call. Frankly, now is the best time of year to talk with your accountant because they won’t be nearly as busy as they will be come January 1.

Tax Task 8: Stuff as much money as you can into your retirement accounts. If you haven’t already, contribute the maximum to your IRA or 401(k) as stepping up your contributions now will definitely cut your liability, tax wise, when you file in 2016.

Tax Task 9: Don’t forget to give to charity. If you itemize your taxes any donations of cash or hard goods that you made to qualified organizations it’ll cut your tax bill next year. Remember that you’ll need a written record of your contributions if they are more than $250 and, if they’re  more than $5000, an appraisal.

There you go, 9 Tax Tasks that you can easily take care of now so that, come tax time next year, you’ll be well ahead of the game.

 

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